Issue Brief: Jobs & the Vermont Economy

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The Shumlin administration has been painting a rosy picture of Vermont’s economy and job market, based largely on the fact that we have one of the lowest unemployment rates in the nation. (Currently at 3.7% vs. the national average of 6.2%).

However, a more complete look at the issue presents a less optimistic outlook for the path we are on. Vermonters seem to intuitively understand that something’s wrong.

They’re right.

Vermont gets consistently poor ratings for business climate in national studies. Some examples: The Tax Foundation placed Vermont 45th out of 50, Forbes 43rd, CNBC 42nd, and the British-based Economist gave Vermont an “F,” one of just five states to receive one. These judgments are based for the most part on high taxes, complex regulations, poor infrastructure, and an inadequate work force.

Vermont’s population is not growing, and the state’s demographics are trending older, which means we are looking at a future with fewer taxpayers and more people in need of services. Vermont is the second oldest state in the U.S. behind only Maine.

In June, the Shumlin administration announced the necessity to cut $31 million from the FY15 budget due to a 1.8% revenue downgrade. Ironically, even with the cut, FY15 will still constitute the biggest tax haul in state history. It’s not a taxing problem; it’s an unsustainable spending problem.


In the face of these challenges, the legislature used the 2013-14 biennium to add even more burdens to businesses, small and large, by passing or considering for example:

  • Increasing state spending by an average of 5.3% per a year, a rise from $4.72 billion to $5.50 billion. (Roll Calls: House 2013, 2014, Sen. 2014)
  • Increasing the state’s minimum wage to $10.50/hr. (Roll Calls: House 2014)
  • Raising property taxes on businesses by 13.5¢ per $100 of assessed value to $1.515 – a 10% increase. (Roll Calls: House 2014, Sen. 2013, House 2013)
  • Mandatory Agency fees for some non-unionized workers. Roll Calls (House 2014, Sen 2013)
  • Mandatory paid sick leave legislation (Considered, and likely to be revisited)
  • Enacting more restrictive regulations on development. (Roll Call: House 2014)
  • And, a commitment to raising at least $2 billion in new taxes to pay for single payer healthcare, which will likely be centered on a payroll tax. (See Galbraith VIDEO)


  • Over the 2013-14 biennium, good paying jobs and the businesses that create them have been conspicuously leaving Vermont or reducing their presence in the state. Some examples: IBM in Essex (Just under 1000 jobs gone and 4000 are in limbo), Vermont Yankee in Vernon (Over 600 jobs phasing out), Energizer in Franklin County (165 jobs gone), Plasan Composites in Bennington (140 jobs gone), Kennemetal in Lyndonville (80 jobs gone), Huber + Suhner in Essex (65 jobs gone).
  • The jobs replacing these are not of the same caliber. The July 2014 projections show where the state expects job growth to occur, by number of jobs, and by industry. Here’s the top 10: 1. Cashiers, 2. Personal Care Aides, 3. Retail Salespersons, 4. Combined Food Prep/Serving Workers including fast food, 5. Waiters & Waitresses, 6. Registered Nurses, 7. Landscaping & Grounds keeping, 8. Carpenters, 9. Maids/Housekeeping, 10. Farmers/Ranchers/Ag. Managers.
  • Vermont still has roughly 2,000 fewer employed people now than in 2007.

Total NonFarm Employment 2000-2014: Annual Averages


  • In 2013, the total labor force declined by 2,650 participants. Total employment positions fell by 1,900 positions.
  • Vermont is the most costly state in the Union for manufacturing. A 2010 University of CT study found that it costs 95.9 cents to manufacture a dollar’s worth of goods in Vermont. Comparatively, on a national scale, the average cost to produce one dollar of goods is 83.3 cents.
  • Vermont’s household electric rates used to be the lowest in New England, but have been rising faster than of other New England states and are now the 4th highest in the US, after Connecticut, Alaska and Hawaii. (Electricity Prices by State)
  • Vermont has one of the slowest population growth rates in the country at only 0.02%, which ranks 49th. (World Population Review)
  • The largest component of Vermont’s $26 billion GSP is government at $3 billion or $13.4%.


Considering the lack of economic growth, Vermont’s demographic trends, and the overall business climate, to describe Vermont’s employment outlook as anything other than bleak is being blind to the economic realities Vermonters live with every day.

In order to get its economy back on track, Vermont needs to control its spending (and the taxes that fuel it), simplify its regulatory processes, and make it easier to hire workers. One successful model for this was the adoption of a Taxpayer’s Bill of Rights by Colorado in the 1990s (See How to Win the War on Poverty), or, more recently, North Carolina’s overhaul of their tax and regulatory policies.

For an in depth look at Vermont’s economic and demographic challenges, see Off the Rails: Changing Demographics, Changing Economics, Accumulating Obligations.

About Us

The Ethan Allen Institute is Vermont’s free-market public policy research and education organization. Founded in 1993, we are one of fifty-plus similar but independent state-level, public policy organizations around the country which exchange ideas and information through the State Policy Network.

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